What impact are ongoing electricity black-outs likely to have on the
property market?

In response to the above question Monté Jordaan, MD of Multi-Projects, an
investment property marketing company based in Somerset West, says: "We do
not know how great the impact on the economic growth of South Africa is
going to be. Only time will tell on that score. But we do believe that the
energy crisis will have an effect on property developments - and developers
who do not plan for alternative energy sources will suffer.

"Developers and developments that incorporate alternative energy sources to
Eskom-produced power will flourish. Developments with generators and
alternative 'green' sources of power (such as solar panels) will be in high
demand. Security that runs off solar panels or stand-by generators will also
increase in desirability and value, since power-cuts increase security
risks. The smarter developers that apply creative thinking will survive and
prosper. Developers are committed capitalists - and they will find
solutions!

"However, as indicated by Eskom, all the indications seem to be that power
cuts are likely to accelerate until well into the future – and major power
stations require about 5 years or longer to construct. This could mean fewer
developments taking place, or lead to them being postponed for several
years. This in turn will result in less stock being available, especially
residential units. John Loos of FNB believes that the demand for residential
property in the affordable market of up to R800,000 will increase. This
increased demand will lead to increased prices in this category - while a
shortage will drive the prices up further. We further believe that
landowners that want to dispose of their land for development purposes
(especially unzoned land) will see a dramatic reduction in their expected
values, due to the economy cooling down, the increased development cycle,
and the increases in holding costs for developers. These costs cannot just
be passed on to the consumer; the consumer market is currently very price-
sensitive."

Jordaan says he believes that the interest cycle is very close to its peak,
and that we could see reductions in the first half of 2009. "Taking all of
the above into account, one must always remember that investing in property
is a long-term journey and not a quick one; investors must remain calm and
focus on the longer term. The South African property market is still
exhibiting the characteristics of a normal market, it is just 'taking a
breather' from a 5-year growth period. I am sure that it will continue its
positive run in and from 2009 to 2012/2014. For those who want to invest in
property, now is the right time to buy - especially in new developments that
will only be completed in 2010 or thereafter.

"People must not make hasty, irrational decisions and sell their properties
without considering all the options; they might just find out down the line
that they cannot replace what they had. Property remains the cornerstone of
wealth creation for the majority of South Africans, and will continue to be
so for decades to come. I strongly believe in the South African property
market and its future. In terms of the power shortages, we must just all
remain calm and find a common solution – after all, this power shortage is
just a symptom of a growing economy!".


Contact Monté Jordaan of Multi Projects on +27(0)82 774 9202; office +27
(0)21 850 9620; info@multiprojects.com or visit our website:
www.multiprojects.com